Up to eyes in debt

College students are taking out more loans than ever

Freshman Marcus Gallagher expects to have about $100,000 in student debt by the time he graduates from college, and that's something he says he's okay with.

The music education major opted for a five-year plan instead of the standard four-year plan, knowing that each year would cost him $20,000 in loans.

Intensive class schedules of music majors often means making sacrifices and taking 18 1/2 credit hours each semester to graduate within the four-year timeline — something Gallagher wasn't willing to do.

"You can either kill yourself working or spend an extra year in school and be a lot happier," he explained.

The trend of students accumulating more debt during college is increasing statewide and nationwide, according to a study by The Project on Student Debt released earlier this year.

The report shows that nationally about two-thirds of students at four-year universities leave school with student loan debt. The amount of debt is steadily increasing too, growing by at least six percent during the past five years.

The average amount of student debt at Ball State University is about $3,000 less than the national average. The university has been listed as one of the 150 "best values" in the nation and as one of the best schools overall in the Midwest by Princeton Review.

Dave Mathews, assistant director of Scholarships and Financial Aid, said the office has noticed more students applying for larger loan amounts during the past few years. It's something Ball State officials are aware of and worried about, Mathews said.

"We are concerned about the increase and what impact debt will have on [students] and their economic futures," he said.

More students are applying for the maximum Stafford Loan amount, along with other loans from private companies. Mathews said he's seen students who do this acquire as much as $20,000 within one year.

"It's easy to accumulate," Mathews said. "A lot of times students won't think about the long term. They only think about the here and now."

Professor of Finance and Insurance John Fitzgerald said student debt isn't such a bad thing.

"Going to college is an investment," he said. "I call student loans good debt, as opposed to credit cards, which are bad debt."

According to a 2009 report by the U.S. Census Bureau, a worker with a bachelor's degree earns an average of about $26,000 more than a worker with a high school degree. That's a difference of more than $1 million during a span of 40 years.

"It's going to pay off in the long run," Fitzgerald said. "It may take just a little bit longer because of the debt, but [a college education is] still worth undertaking."

That's the mind set junior apparel design major Damelis Naranjo has about her college experience. She has been a Twenty-first Century Scholar since middle school, which pays for her tuition at Ball State. Naranjo works about 30 hours each week at two part-time jobs to pay for other expenses, such as rent, car payments and books. She said working two jobs is stressful at times, but worth it because she doesn't have any student loan debt.

"I have to stay up late to study and study between class as much as I can," she said. "But that money I make after I graduate goes straight to me — not to a loan company."


Tips from Mathews of how to manage debt:
• Borrow as little as you have to. Consider part-time employment, family and scholarship opportunities before applying for loans.
• Maintain a low standard of living while in college. Get by with as little as possible so you don't have to live that way after graduating.
• Don't borrow more money than you expect to make during your first year's salary.

National average of debt among 2008 graduates- $23,200

States with highest average debt levels:
District of Columbia- $29,793
Iowa- $28,174
Connecticut- $26,138

State with lowest average debt:
Utah- $13,041
Hawaii- $15,156
Kentucky- $15,951

States with highest percentage of students graduating with debt:
South Dakota- 79 percent
West Virginia- 73 percent
Minnesota- 72 percent

Ball State University statistics:
Average debt of graduates 2008- $20,326
Proportion of graduates w/debt 2008- 67 percent
Average federal debt of graduates 2008- $16,690
Proportion of graduates w/federal debt 2008- 66 percent
Full-time enrollment fall 2007- 15,367
2007-08 In-state tuition- $7,212
2007-08 % Pell Grant recipients- 20 percent

Source: The Project on Student Debt 2008 annual report